eNews – December 19, 2025
Budget news and analysis, Elected Officials Conference agenda, Gift cap for elected officials...and more!
Friday, December 19, 2025/Categories: eNews
This edition of eNews is sponsored by Capital Results, a full-service public affairs and business consulting firm helping a wide range of companies, associations and government entities achieve their public policy and business goals. Learn more >
In this issue:
VML Events
Budget
COIA
VML Events
Elected Officials Conference – Full agenda now available!
Event Dates/Location: January 7-8 in Richmond
For 2026, VML is pleased to offer an expanded take on our annual Elected Officials Conference. Attendees can choose to register for one or both days. This in-person event is offered to local officials and staff from VML member localities.
Registration and the full agenda are available on VML’s website here >.
Wednesday, January 7 - Elected Officials and Public Safety (1:00 PM - 4:30 PM)
An afternoon of sessions dealing with public safety for elected officials. Topics will include Cybersecurity for Local Governments as well as Personal Safety for Public Officials.
There will be a reception for attendees beginning at 5:00 PM.
Thursday, January 8 - Elected Officials Boot Camp (8:30 AM - 4:00 PM)
The Elected Officials Boot Camp is a valuable training and networking opportunity for newly elected and veteran local officials from across the Commonwealth.
Sessions on January 8 will include Freedom of Information Act (FOIA) and Conflict of Interest Act (COIA) training provided by staff from the FOIA and COIA councils. As such, these sessions will satisfy the bi-annual requirement for these topics. Other topics covered this day will include budgeting, zoning, council/manager relations, and more!
Breakfast and lunch are included. Attendees arriving the day before are invited to attend the reception happening at 5:00 PM on January 7.
VML Contact: Rob Bullington, rbullington@vml.org
Local Government Day – Deadline to reserve hotel rooms is January 20
Event Date/Location: February 5 in Richmond
Join us close to cross over for the 2026 General Assembly session to learn about legislation that may affect local governments. The day will kick off with lunch and briefings beginning at 11:00 AM at the Hilton Richmond Downtown. Attendees can visit with their delegation and attend session meetings in the afternoon. An evening reception at the Hilton will provide further opportunities for networking and talking with legislators.
Information, including links to lodging options, and registration are available here >.
VML Contact: Rob Bullington, rbullington@vml.org
Save the date: Small Towns Conference happening May 14-15 in Chincoteague
The Small Towns Conference provides an overview of topics related to local government management specifically geared towards small town issues. This conference invites elected officials, including council members and mayors, town managers, and leadership staff to learn, network, and share resources and ideas.
This year the Small Towns Conference will be held at the Chincoteague Center. Additional lodging options, registration, and agendas will be posted to VML’s website here as that information becomes available.
VML Contact: Rob Bullington, rbullington@vml.org
Budget
Governor Youngkin releases the final budgets of his term
On Wednesday, December 17, at a joint meeting of the House Appropriations, House Finance, and Senate Finance & Appropriations committees, Governor Youngkin unveiled his recommended amendments to the 2024-26 biennial budget, also referred to as the Caboose Bill. He also rolled out his proposed budget for the 2026-28 biennium that begins on July 1, 2026.
Governor-elect Spanberger and her budget team will need to decide quickly which of her predecessor’s budget initiatives she will keep and which she will jettison. After January 17, 2026, when she is sworn in as governor, the budget will become Governor Spanberger’s responsibility. Of course, the 2026 General Assembly will undoubtedly put its mark on the Commonwealth’s fiscal plans as well.
As we begin to dig into Governor Youngkin’s budget proposals, it’s important to remember that we’ve only heard from Governor Youngkin, Secretary of Finance Steven Cummings, and DPB Director Michael Maul. Accordingly, the Youngkin Administration will highlight those issues they want to showcase. And they won’t dwell on the fiscal decisions that may not be well received.
In other words, “keep your powder dry” before opining whether the budget is the best you’ve ever seen or awful. It took Governor Youngkin and his team more than three months to pull this plan together; it will take some time – perhaps weeks – to make an informed assessment of the budget proposal.
That said, here’s what we’ve gleaned thus far.
As we had been hearing over the past few weeks, Governor Youngkin’s revenue outlook hues very closely to what the staff directors of the money committees projected at their annual retreats in late November. This is noteworthy because the Governor initially described their estimates as overly negative. Furthermore, in response to criticism from one senator that the administration’s outlook was too rosy, Secretary Cummings asserted that Virginia’s economy is “rockin’.”
Rockin’ is in the eye of the beholder, however, as the general fund revenue growth assumed in the Governor’s proposed budget is in fact relatively modest. According to the Secretary’s presentation, the budget assumes growth of $823 million in FY 2026 and $566 for the FY 2026-28 biennium, after proposed policy tax policy changes.
Conforming to changes included in HR 1 will reduce general fund revenue by $433 million over three years, significantly less than the $1.1 billion the Department of Taxation estimates as the cost of full conformity. The Governor also proposed tax cuts totaling $272 million for three time-limited federal tax policy changes, two that have been previously rejected by the 2025 General Assembly. Those proposals include:
- No tax on car loan interest - $53 million
- No tax on tips - $54 million
- No tax on overtime - $165 million
All this means that discretionary general funds are in short supply after spending on mandatory spending programs are addressed. But the Governor also had at his disposal more than $400 million in additional general funds after average daily membership, a late breaking data point in K-12 rebenchmarking, declined more than anticipated based on actual fall enrollment data submitted by local school divisions,
In total, the Governor budget recommends $6.8 billion in additional general fund spending commitments, offset by more than $2.1 billion in budget reductions for a proposed net increase of $4.7 billion for the 2026-28 biennium.
For the Caboose Bill, the Governor is proposing a net general fund increase of $858 million in FY2026, driven primarily by a historic increase in projected Medicaid funding that requires $410 million to maintain service for current enrollees.
Required Medicaid funding also accounts for more than half of all the new spending included in the Governor’s budget proposal for the 2026-28 biennium. The budget adds $2.4 billion to fully fund current services in Medicaid for pregnant women and children, as well as the elderly and disabled. To pay for this unprecedented increase in Medicaid spending, the budget proposes $614 million in reductions including:
- $238 million by eliminating inflationary adjustments for hospitals, teaching hospitals, nursing homes and other provider rates;
- $108 million by placing limits on mobile crisis and community stabilization for individuals with behavioral health needs; and
- $68 million for Medicaid enrollees with autism who require applied behavior analysis services.
When you consider the Medicaid providers included above or the populations served – individuals with mental illness and children with autism – you realize that reducing funding as proposed will be challenging, even if it’s warranted, and it may well be. Expect a lively debate on these cost saving initiatives.
The proposed savings in K-12 education are sizable but largely driven by changes in enrollment, as previously noted, actuarial assumptions regarding Virginia Retirement System (VRS) rates, or utilization of services. Most of these reductions appear to be non-controversial.
A big surprise in the Governor’s budget roll out was a proposal to include a 2% bonus for teachers and support staff and 2% for state employees and state-supported local employees in FY 2026 and an additional salary increase of 2% each year for those groups for the next biennium. The cost of that commitment exceeds $1.0 billion from the general fund over that three-year period. If the Commonwealth’s economy is indeed “rockin’” and proposed savings reductions are achievable that may be possible. If not, those salary changes may need to be revisited.
Finally, the best news we heard – or rather, didn’t hear – was any proposal to reduce or modify the car tax. For two years we’ve had to wrestle with last-minute recommendations to the car tax that raised anxiety at the local level about this major local revenue source. Not this year, at least from the outgoing governor. Whether Governor-elect Spanberger intends to look anew at the car tax remains to be seen.
VML Contact: Joe Flores, jflores@vml.org
Budget preliminary analysis by VML staff
VML Contacts: Janet Areson, jareson@vml.org; Josette Bulova, jbulova@vml.org; Mitchell Smiley, msmiley@vml.org
As we continue to plow through the 668 pages of prose in the 2026-28 budget in the days ahead, VML staff will highlight issues for local governments. In the meantime, below are some of the key areas and issues that VML staff are tracking.
Education
K-12 bonuses. The introduced caboose budget (HB29) includes a 2% salary bonus was added in the second year for SOQ-funded positions requiring a local match. A one-time bonus of $1,000, without a local match requirement, was provided in the first year of the biennium and has already taken effect. This would be an additional bonus.
Salary increases. The budget (HB30) includes a salary increase of up to 2% for fiscal years 2027 and 2028 for all SOQ-funded positions with a local match requirement. Salary increases can be less than 2%, but localities will receive a prorated portion of state funding based on the increase. Additionally, localities do not have to increase salaries if they do not wish to do so.
Retirement funds. The budget transfers $185 million in the first year and $100 million in the second year from the Literary Fund to support public school employee retirement funds.
Decrease in K-12 funding. The introduced caboose budget (HB29) decreases K-12 funding for SOQ-funded programs, with the reforecasted cost of rebenchmarking being lower than initially projected.
Grant loans for school construction. The introduced caboose budget (HB29) allocates an additional $28 million to the Literary Fund in the second year to be used by the Board of Education to grant loans for school construction to localities. This changes the initial amount from $50 million to $78 million.
Updates to Direct Aid to Public Education. Updates to the costs associated with providing Direct Aid to Public Education for the 2026-2028 biennium are reflected throughout the budget. Changes reflected enrollment, funded instructional salaries, and other technical factors. The estimated cost of rebenchmarking is $580 million in FY27 and $572 million in FY28.
School Construction Fund increases. The budget increases the School Construction Fund by $127 million based on actual and projected casino revenues. Additionally, $172 million was transferred from the Literary Fund to the School Construction Fund to distribute funds for construction more easily. In total, this allocates $299 million over the biennium into the School Construction Fund.
Clarifying language for School Construction Assistance Program. The budget adds language to clarify that public charter schools, regional public charter schools, and joint and regional schools are eligible to receive School Construction Assistance Program grants. The language also specifies that local school divisions cannot exclude the listed schools from consideration for construction grants.
The Office of Education has a PDF with additional information about all changes available here >.
Administration
Compensation Board
Two percent salary increase. Includes funding to support a two percent across the board increase each year for Constitutional Officers, regional jail superintendents, finance directors, and their Compensation Board-funded employees effective July 1, 2026 and July 1, 2027.
Staffing standards. No additional funding included to address staffing standards in Constitutional offices.
Deputy sheriff positions. Provides $3.9 million in the first year to support allocation of additional 71 deputy sheriff positions for law enforcement with intent to ensure every county sheriff’s office with primary law enforcement responsibilities has a minimum of 10 law enforcement deputy positions.
Administrative positions in sheriff’s offices. Provides $700,000 in the first year only to support 18 administrative support positions in sheriffs’ offices where allocated positions are not funded due to previous budget reductions during state revenue shortfalls and the sheriff’s office has no funded administrative support positions.
Jails/regional jails. No funding specifically provided to jails.
Executive Offices
Office of the Children’s Ombudsman
Additional staff. Provides funding of $300,750 each year and two new positions (data analyst and deputy director) for the office of the Children’s Ombudsman.
Health & Human Resources
Children’s Services Act
Reduce state match for community-based services. Reduces the state match rate on community-based services from 81 percent to 71 percent, saving the state $10.8 million the first year and $11.8 million the second year while shifting that same amount of cost onto local governments. This is the category serving the majority of children in the CSA program.
Further cap state funding for private day placements. Reduces the state match even more for private day special education placements by capping the state’s reimbursement at no more than 2.5 percent cost increase year over year. This means that if a private day program increases its program costs by more than 2.5 percent from the previous year, the local government would pick up both its share and the state’s share of the cost of that increase. This would save the state, and shift costs onto local governments of an estimated $3.39 million in the first year and $3.69 million in the second year. In 2025 the General Assembly approved capping the state share at 5.0 percent cost increase year over year.
Department of Behavioral Health & Developmental Services
Change Marcus Alert funding. Removes requirement that each CSB/locality receive $600,000 to implement the Marcus Alert program and allows the Department to decide how much to allocate based on the local funding needs each year. Also modifies language to clarify that mobile crisis units are sufficient to meet any requirement to establish a community care team. These are changes supported by the Behavioral Health Commission.
Department of Medical Assistance Services
Delay implementation of redesigned behavioral health services. Delays the implementation of behavioral health redesign from July 1, 2026, until Jan. 1, 2027. This proposed redesign, released earlier this year, raised concerns from community services boards and human services operators because of the tight deadlines proposed and substantial changes in services and qualifications for services proposed in the program.
Department of Social Services
SNAP administrative costs. Adds $43.03 million the first year and $57.37 million the second year to provide the new state responsibility for administrative costs as federal funds decline from 50 percent to 25 percent. Maintains the 15.5 percent local match rate on state-supported SNAP administration for local departments of social services.
SNAP quality assurance team. Provides $1.15 million GF and 520,865 NGF the first year and $1.25 million GF and $416,692 NGF the second year and 14 positions each year for a SNAP quality assurance team charged with finding and correcting SNAP payment errors before they can affect the state’s error rate in order to reduce further shift of federal program costs onto the state.
Fund salary minimum increase. Provides $3.46 million GF and $1.54 million NGF each year to increase the salary minimum for local family services employees to $55,000 annually.
Centralize CPS intake system. Provides $14.596 million the first year and $18.08 million the second year and 132 authorized positions to fund and staff a centralized intake system for child abuse and neglect reports at the state level that will take reports, triage, and disseminate cases to the appropriate local department of social services for response and investigation. This was a recommendation of the Office of the Children’s Ombudsman.
Fund state oversight of local departments. Provides $656,842 GF, $218,946 NGF and six positions in the first year and $2.595 million GF, $898,744 NGF and 26 positions in the second year to allow VDSS to issue corrective action plans for, and proceed with state takeover of local departments of social services. This was a recommendation of the Office of the Children’s Ombudsman.
Public Safety
Department of Criminal Justice Services
State assistance to local law enforcement (HB 599 funding). No increase in funding to this program in the biennium, ignoring statutory requirement to increase funding at the rate of growth in state revenue.
Assistance to local law enforcement for TDO/ECO. Provides $2.0 million in the first year only to reimburse local law enforcement agencies for time spent transporting individuals under temporary detention orders (TDOs) or Emergency Custody Orders (ECOs).
Department of Emergency Management
Disaster management funding. Provides $5.0 million in the first year and $7.0 million in the second year as well as $35.0 million in non-general fund support in the first year to strengthen emergency management capability to react to any federal restructuring of disaster assistance support to states.
Rural emergency communications. Provides $424,000 in the first year and $288,000 in the second year to support communications technology in rural localities.
Department of Juvenile Justice
Community placement program. Adds $942,065 each year to cover the increased cost of operating community placement programs.
Natural Resources
Water Quality/Stormwater. Allocates general fund dollars for two priority issues in VML’s 2026 Legislative Program: The Water Quality Improvement Fund and the Stormwater Local Assistance Fund. Also included is funding for Agricultural Cost Sharing.
- Water Quality Improvement Fund – $140.6 million (GF) for Enhanced Nutrient Reduction Certainty Program.
- Stormwater Local Assistance Fund – $43 million (GF) for MS4 localities.
- Agricultural Cost Sharing – $144.1 million (GF).
Inclusion of these funds in the budget approved by the General Assembly would help the state meet commitments to improve water quality throughout the Commonwealth.
Useful budget resources
For additional details on the budget from the administration’s perspective, please see the links below.
VML Contact: Joe Flores, jflores@vml.org
COIA
Gift cap for Virginia elected officials increased
On November 19, 2025, the Ethics Council formally increased the gift cap given in Virginia Code sections 2.2-3103.1 and 30-103.1 to $131.
The council is statutorily required to increase the gift cap, pursuant to subsection I of
§ 2.2-3103.1 and subsection G of § 30-103.1, every five years, “in an amount equal to the annual increases for that five-year period in the United States Average Consumer Price Index for all items, all urban consumers (CPI-U), as published by the Bureau of Labor Statistics of the U.S. Department of Labor, rounded to the nearest whole dollar.”
The council last increased the gift cap in 2020, when the limit was raised from $100 to $108.
The increase to $131 is retroactive to January 1, 2025, and applies to this calendar year and the next four calendar years.
January 10 notification letter
Each lobbyist is required to send a notification to each legislative and executive official who have received gifts that require their name to be listed on Schedule A or B of the Lobbyist's Disclosure Statement. This notification should include information for the prior calendar year, complete through December 31. Because the reporting period for lobbyists does not run a calendar year, it means that the notification will cover a portion of the year that the lobbyist has already reported on during the preceding lobbying year, and a portion of the year that the lobbyist will not be disclosing until July 1.
Virginia Conflict of Interest and Ethics Advisory Council: ethics@dls.virginia.gov, (804) 698-1810